Receiver Of Goods Who Has Made Advance Payments Is Also An Operational Creditor: NCLT Chandigarh

The National Company Law Tribunal (NCLT), Chandigarh bench of Shri Harnam Singh Thakur (Judicial Member) and Shri Ashish Verma (Technical Member), held that the receiver of goods who has made advance payments for the goods purchased is also an Operational Creditor. Background Facts: Kiranakart Technologies Pvt. Ltd. (“Operational Creditor”) is engaged in the business of trading of consumer goods on a B2B (Business to Business) basis and is also known by its brand name “Zepto.” On the other hand, Hyretail Technologies Pvt. Ltd. (“Corporate Debtor”) is engaged in logistics, warehousing, wholesale supply, and distribution of grocery and dairy products. The Operational Creditor entered into an agreement with the Corporate Debtor for procuring stock of fresh milk and other dairy products such as curd, yogurts and paneer by issuing various Purchase Orders. However, the supply made by the Corporate Debtor was less than the Advance Payments given by the Operational Creditor through Purchase Orders and as the Operational Creditor discontinued business with Corporate Debtor it demanded the amount back. However the Operational Creditor did not make the due payment of its operational debt, and had stopped answering the calls and communications by the Operational Creditor. Pursuant to which the Operational Creditor issued a demand notice to the Corporate Debtor under Section 8 of the Code, but no reply was given by the Corporate Debtor. Thereafter, Section 9 petition was filed by the Operational Creditor for initiation of Insolvency Proceedings against the Corporate Debtor, claiming an unpaid Operational Debt of Rs.7,57,60,073/- Contentions: The Corporate Debtor submitted that it had taken money from the operational creditor for business expansion and not payments for goods supplied. Hence, the money taken cannot be termed as loan as it had taken money from other entities also for business expansion. The Corporate Debtor submitted that initially it's business was limited to Faridabad, but both parties agreed to expand into Gurgaon with warehousing and logistics. However, after expansion the Operational Creditor stopped business dealings with the Corporate Debtor. It stated that WhatsApp chats prove that the Operational Creditor acknowledged their efforts in business expansion. The Operational Creditor continued business transactions until 31.07.2023 but then suddenly stopped payments, despite committing to Rs. 50 lakhs for continued operations. The Corporate Debtor allegedly incurred Rs. 1.5 crore as additional expenses on business operations based on false commitments. The corporate debtor further contended that there were discrepancies in ledgers as purchase orders were raised in the name of "Kiranakart," but payments were received from different entities. The Corporate Debtor claims that the Operational Creditor owes them Rs. 7 crore and the Operational Creditor has concealed material facts from the Tribunal. In response, the Operational Creditor submitted that the Corporate Debtor had availed services from Operational Creditor and payments were facilitated through third-party payment platforms, namely, Nehat Tech Solutions Pvt. Ltd. and Interropac Private Limited and the bank account statements and other financial records clearly reflect that the payments received by the Corporate Debtor were directly linked to the transactions conducted with the Operational Creditor. Findings: The Tribunal remarked that the Operational Creditor had made advance payments to the Corporate Debtor to procure fresh milk and other dairy products and the Corporate Debtor had then raised invoices for the supply of these products to the Operational Creditor. The Corporate Debtor Contended that it received ₹12.50 crore from Interropac Private Limited and ₹4.20 crore from Nehat Tech Solutions for the business expansion of the Operational Creditor The tribunal observed that the corporate Debtor has not produced balance sheet where this transaction is either shown as a loan or an investment in equity. Hence there is no merit in the plea raised by the Corporate Debtor that this aforesaid amount was for business expansion purpose. There are many reconciliation statements available in records that shows excess amount paid by the Operational Creditor to the Corporate Debtor exceeding Rs. 1 crore which has not been returned by the Corporate Debtor as yet despite discontinuation of business by the Operational Creditor with the Corporate Debtor. The Tribunal Noted that the Corporate Debtor from time to time has admitted to have received funds from the Operational Creditor in advance against the supply of products and amount in excess of Rs.1 crore are still lying with the Corporate Debtor even after all the reconciliation as available on the records are taken into account. Supreme Court in Consolidated Construction ...

Receiver Of Goods Who Has Made Advance Payments Is Also An Operational Creditor: NCLT Chandigarh

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